6/21/2026 - In The New Market Wizards book, Jack Schwager asks Linda Raschke if she's concerned about giving away her trading secrets. She replies, "I truly feel that I could give away all my secrets and it wouldn't make any difference. Most people can't control their emotions or follow a system. Also, most traders wouldn't follow my system, even if I gave them step-by-step instructions, because my approach wouldn't feel right to them" (p. 308). She advises developing traders to "Start by finding a niche and specializing. Pick one market or pattern and learn it inside out before expanding your focus" (p. 308-309). She recommends that new traders *don't* look at charts and instead write down prices every five minutes from open to close and do this for an entire week. Such immersion fuels pattern recognition--and, from the patterns we perceive, we can develop our own trading styles and methods.
"Only by acting and thinking independently can a trader hope to know when a trade isn't working out", she observes (p. 309). Jack Schwager observes that "exuberant confidence appears to be one of the essential elements in exceptional achievement as a trader" (p. 310). This confidence isn't simply a personality trait or the result of positive self talk. It comes from immersing oneself in markets, discovering patterns that make sense, and "acting and thinking independently".
The successful trader is an intellectual entrepreneur, studying and studying the market place, finding unique opportunities, and pursuing them with the confidence of one who has truly done their work.
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6/19/2026 - A fascinating example of Market Wizardry comes from The Next Generation book: Kristjan Kullamagi. George Coyle observes, "I found it incredible that Kullamagi achieved such astounding returns while risking 1% of his account on most trades" (p. 29). On one hand, Kullamagi is "willing to rush headlong into extreme volatility" (p. 28). On the other, he has a highly structured approach to trading, as noted by Jack Schwager: "He has precisely three types of setups that he has traded for years and continues to trade. Each of these setups is well-defined in terms of multiple characteristics..." (p. 30). The edge here is the willingness to dive into volatile market situations, but in a very structured manner.
Even so, Schwager observes that most of Kullamagi's trades are losers (p. 31), with only 25-30% of trades being profitable. His unusual success occurs for two reasons: 1) being in volatile markets, when he wins, he wins big; and 2) his relentless risk management. Early in his career, he failed multiple times, but "he persevered and ultimately transformed his small $5000 account into tens of millions in profit" (p. 33).
The various Wizards achieve their results differently, but the combination of unique search for opportunity, rigorous risk management, and perseverance enables each great trader to find their distinctive road to success. What Wizards don't do is lazily copy others.
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6/18/2026 - During my years working at SMB Capital, I had the privilege of working with one of the great traders included in the Market Wizards: The Next Generation book. His name is Kenny Sharkness, but to those at the firm, he's known as Shark. One of the qualities that Jack Schwager and George Coyle capture about Shark is his "multitasking". Coyle explains that, "Sharkness succeeded with a trading method that requires such extreme multitasking that it sounds like a recipe for disaster: trading a continually changing list of a score of strategies over multiple timeframes" (p. 288). Schwager adds, "A key component of Sharkness's success is his constant striving to learn what is working for other traders and then incorporating that knowledge to create new strategies to add to his repertoire of trading approaches" (p. 289).
One of the ways that Shark achieves this ongoing learning is by journaling his best and worst trades each day and and noting, in detail, what he has done right and wrong. Schwager observes that Shark's journaling also includes his psychology during his trading "as he notes how his moods affect his trading and vice versa" (p. 290).
In the past, I've mentioned that one psychological quality distinguishing great portfolio managers is intellectual curiosity. The research I've conducted at hedge funds suggests that cognitive strengths are every bit as important as emotional ones in terms of trading performance. Through Shark's interview, we can see this curiosity first hand. He is constantly learning, which means he is constantly adapting.
When I first met Shark, what struck me were the number of screens open on his desk. He literally looked at dozens of stocks over multiple time frames. Driven by curiosity, he literally saw more opportunities than other traders, which increased the odds of finding really great opportunities. When Shark began leading a team, that search for opportunity increased manyfold.
Curiosity drives multitasking. Multitasking drives learning. Learning drives greatness.
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6/17/2026 - In the Unknown Market Wizards book, Jack Schwager is interviewed and asked about his three favorite quotes from Wizards. One of those particularly stood out from a psychological perspective. Jim Rogers explained, "I just wait until there is money lying in the corner, and all I have to do is go over there and pick it up. I do nothing in the meantime" (p. 418). In other words, Rogers doesn't hunt and hunt to find something to trade; his default mode is to "do nothing". What drives Rogers is clarity. If the opportunity is not clear and apparent, he doesn't take risk.
A different aspect of clarity is Schwager's favorite quote, which is from Bruce Kovner: "Know where you will get out before you get in" (p. 416). If a trader is very clear what would tell him his trade is wrong, then managing risk becomes a straightforward task, not something laden with emotion.
Achieving such clarity requires considerable experience, which is why the paramount priority for developing traders is surviving their learning curves. When we've seen enough opportunities and understand what would tell us to stay in the trades and what we would need to see to get out, then decisions are no longer tainted with fight or flight reactions.
The great trades come to us as the result of deep pattern recognition. That is why so many Wizards, in their development, have spent long hours tracking markets. Not many traders have the inner security and confidence to sit and sit and sit, trusting that the right opportunities will come along. And not many clearly know and accept what they'll need to do if those opportunities don't work out.
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6/16/2026 - The most recent Market Wizards book, Market Wizards: The Next Generation, contains a number of gems. In the interview with Lance Breitstein, he is asked whether he was confident he would succeed when he started out. He replied, "I wasn't confident that I would succeed, but I was highly confident that I would outwork everyone at that firm." Indeed, he spent hours recording his trading and reviewing key decision points on Sunday. This extra exposure cemented his ability to recognize patterns in real time.
For Breitstein, this was not simply experienced as hard work. Jack Schwager points out "that for Breitstein, trading was like an elaborate game, something fun that he loved to do, just like he loved playing video games as a kid" (p. 80). There's an important psychological point here. Lots of traders work hard. Many work long hours. What makes the Wizard stand out is working long hours in what is known as the flow state: being so immersed in what is fun that the learning becomes supercharged and internalized.
This is why many of the Wizards work just as hard when markets are closed as when they're open. They love the discovery process. They love the hunt. They love markets, not just trading. Those who love trading tend to overtrade. Those who love markets will learn to master those markets long after trading hours are over.
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Equally important, however, they did not simply return to what they had been doing. The big loss led them to change their approach to trading in a way that prioritized risk management and avoidance of large losses. Instead of going for large absolute returns, they focused on solid risk-adjusted returns, where the amounts gained relative to the amounts lost were high. They redefined success and created a business that was sustainable: financially and emotionally.
Again and again, we read the words of the Wizards and risk management comes up as a key element of success. What I find noteworthy as a psychologist is that the high focus on managing loss does not come at the expense of excitement over discovering opportunity. The Wizard has the unique ability to keep one eye on the horizon of growth and achievement and the other eye on the bottom line.
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